While only 11 states can boast of legislation requiringstatewide customer choice for gas service, a group of Michiganlegislators have recently acted to boost that total. A package ofseven bills was introduced to the state legislature last week withthe goal of totally deregulating the state’s gas industry by April2005. Rep. Mary Ann Middaugh (R-MI-MIH080), one of the package’ssponsors and chair of the energy and technology committee, said thepackage will be considered when the Michigan House returns toLansing next month.

Middaugh has asked for comments on the legislation from all”interested parties” to be on her desk by Jan. 3. A committeemeeting will be scheduled to discuss the issues shortly thereafter.

“This legislation is needed to ensure a continued opportunityfor the nearly 300,000 Michigan gas users who either are currentlyparticipating, or are expected to participate in the voluntaryMichigan Public Service Commission (MPSC) administered pilotprograms for the three major gas utilities in [the state],”Middaugh said in her letter to the interested parties.

If enacted into law, the legislation — called house bills 5201through 5207 — will phase in total customer choice over athree-year period from April 2002 to April 2005. All utilities areexpected to file their restructuring plans by Oct. 1, 2003.Utilities with more than 300,000 customers, including MichCon,Semco and Consumers Energy, would be required to have 40% of theircustomers allowed choice by April 1, 2002, 60% by April 1, 2003,and total choice by the same date in 2004. Utilities with less than300,000 customers would get total choice by April 1, 2005.

The bills also call for a Nymex-based rate cost system. Asupplier’s price would be the average of the Nymex’s 12-month stripplus a surcharge of 12% to 16% of that average and transportationcosts. Under the current system, LDCs pay a price at the beginningof the year. At the end of the 12 months, the LDCs and the MPSCfigure out if a rebate needs to be issued for overpricing or asurcharge should be issued for under-pricing.

The LDCs would be the supplier of last resort under the newlegislation, but no restrictions were put on their affiliates tocompete for gas service. Suppliers seeking to become licensed inthe state are required to have at minimum $100,000 credit.Customers will only be allowed to switch quarterly. One section ofthe bill package is dedicated to rules against “slamming,” or theswitching of a customer from one supplier to another withoutcustomer consent. The proposals also include customer education andawareness program requirements.

Customer choice is no stranger to Michigan’s gas users. Thethree largest utilities in the state all have pilots are in effect.MichCon and Consumers Energy are the largest. MichCon is in itssecond year and has a cap of 150,000 participants, which has beenreached, said Gary Kitts, chief administrative officer with theMPSC. Consumers’ three-year pilot is in its second year and makeschoice available to 200,000 this year; 142,980 have accepted theoffer. Semco Energy is starting the second year of a three-yearprogram. Choice is available to 14,000, and 9,350 have made aswitch.

©Copyright 1999 Intelligence Press Inc. All rights reserved. Thepreceding news report may not be republished or redistributed, inwhole or in part, in any form, without prior written consent ofIntelligence Press, Inc.